24-year-old Mariana single parent and her 5-year-old daughter, Gabriela. Income: 35,000 Expenses: 16,000 total (Annual rent: 16,000;
Question:
24-year-old Mariana single parent and her 5-year-old daughter, Gabriela.
Income: 35,000
Expenses: 16,000 total (Annual rent: 16,000; car: 7500; credit cards: 6,000 making min. paymnts only)
emergency savings: 1800
Contributes savings: 150 per month
The rest $ is in her checking account to pay for bills and day-to-day expenses.
Long term goals: save for Gabriela's college education and own a home someday; however, she has not yet begun saving for either goal.
Mariana's employer offers both a traditional and Roth 401(k) alternative and will match 50% of her contributions each year up to a maximum of 6%. There are four mutual funds with different equity and bond allocations available for her to invest in:
Aggressive growth: 80% equities, 20% bonds (this is my pick) Moderate growth: 65% equities, 35% bonds Balanced: 50% equities, 50% bonds Conservative: 20% equities, 80% bond
Mariana has asked to meet with you prior to enrolling in her employer's 401(k) plan.
Help Mariana determine how to meet her annual savings goals for retirement.
Address your response to Mariana as her CFP professional (also explain calculations used):
a)Describe the factors that will influence how much Mariana should contribute to the 401(k).
b) Describe the factors Mariana should consider in deciding between enrolling in the traditional or Roth 401(k).
c)Explain how you will help Mariana choose a mutual fund: Aggressive Growth
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett